Sinovac Reports Unaudited Second Quarter 2013 Financial Results

       Sinovac Reports Unaudited Second Quarter 2013 Financial Results

- Conference call scheduled for Wednesday, August 14, 2013 at 8:00 AM EDT

PR Newswire

BEIJING, Aug. 13, 2013

BEIJING, Aug. 13, 2013 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a
leading provider of biopharmaceutical products in China, announced today its
unaudited second quarter and half yearfinancial results for the period ended
June 30, 2013.

Second Quarter 2013 Financial Highlights (period-over-period comparisons to
second quarter 2012)

  oTotal sales increased by 86.4% to $17.5 million from $9.4 million.
  oGross profit increased by 70.1% to $13.6 million from $8.0 million.
  oNet income attributable to common stockholders was $1.3 million, or $0.02
    per basic and diluted share, compared to net loss attributed to common
    stockholders of $1.6 million, or $0.03 per basic and diluted share.
  oCash and cash equivalents totaled $92.0 million as of June 30, 2013,
    compared to $91.2 million as of December 31, 2012.

Recent Business Highlights

On July 30, 2013, following the completion of inspection on clinical sites by
the Beijing Drug Administration, Sinovac's registration documentations for its
proprietary EV71 vaccine were submitted to and accepted by the Center for Drug
Evaluation (CDE), China Food and Drug Administration for the technological
reviewon Sinovac's new drug application (NDA)filing.

On August 6, 2013, the phase II clinical results for Sinovac's proprietary
EV71 vaccine were published online in The Journal of Infectious Diseases
(JID), the premier global journal for original research on infectious
diseases. The paper is entitled "Immunogenicity, Safety, and Immune
Persistence of A Novel Inactivated Human Enterovirus 71 (EV71) Vaccine: A
Phase II, Randomized, Double-Blind, Placebo-Controlled Trial."

Dr. Weidong Yin, Chairman, President and CEO, commented, "We are pleased to
report another quarter with strong sales rising by 86.4%, driven by robust
hepatitis vaccines sales resulting from a favorable competitive environment in
China and successful initiatives focused on each market segment implemented by
our sales team. With this diversified sales strategy, Sinovac is poised to
maximize the upcoming commercial opportunity for our EV71 vaccine for which
the NDA filing is under review in China. The top line growth in the current
period was the key driver of a higher gross profit and a higher net income as
compared to previous quarters."

Dr. Yin continued, "The review of our NDA filing for our EV71 vaccine is also
moving forward to the technological review process by the CDE. Hand, foot and
mouth disease (HFMD) continues to represent a significant unmet medical need
in China with reports of over 900,000 HFMD cases and 156 fatalities in first
half of 2013. We aim to launch the EV71 vaccine to provide a solution to
address this unmet medical need as no treatment and prevention options exist
for this highly contagious disease impacting children in China and surrounding
countries."

Financial Review for Second Quarter Ended June 30, 2013

An analysis of sales and gross profit is as follows:

In USD'000           2013Q2      % of total sales 2012Q2      % of total sales
                     (Unaudited) (Unaudited)      (Unaudited) (Unaudited)
Hepatitis            7,021       40.2%            3,561       38.0%
A(Healive)
Hepatitis            9,586       54.9%            6,070       64.8%
A&B(Bilive)
Hepatitis vaccines   16,607      95.1%            9,631       102.8%
Influenza vaccines   48          0.3%             -268        -2.9%
Core sales           16,655      95.4%            9,363       99.9
Animal vaccine       64          0.4%             2           0.01%
Mumps                732         4.2%             -           -
Total sales          17,451      100%             9,365       100%
Cost of goods sold   3,861                        1,376
Gross profit         13,590      77.9%            7,989       85.3%

Total sales increased by 86.4% to $17.5 million in the second quarter of 2013
from $9.4 million in the second quarter of 2012. Both Healive and Bilive
contributed to the sales growth in the ^ second quarter, resulting from the
favorable competitive environment in the private pay market in China and
initiatives implemented by the Company's sales team.

Gross profit increased by 70.1% to $13.6 million for the second quarter of
2013 from $8.0 million in the same period of 2012. Gross margin was 77.9% in
the second quarter of 2013, compared to 85.3% in the same period of 2012.
Excluding the impact of the H5N1 inventory provision of $0.2 million, the
gross margin was 79.0% in the second quarter of 2013. The decline in gross
margin was affected by the sales of different products mix with different
gross margin.

SG&A expenses for the second quarter of 2013 were $8.3 million, compared to
$6.7 million in the same period of 2012. Selling expenses as a percentage of
second quarter 2013 sales was 32.0%, compared to 38.9% during the second
quarter of the prior year. The decrease in selling expense as a percentage of
revenue was mainly due to the increased sales team productivity.

The G&A expenses for the second quarter of 2013 decreased to $2.7 million from
$3.1 million in the second quarter of 2012. The decrease was mainly due to the
effect that the bonuses, paid out or to be paid out, were recorded against a
previously accrued liability account, named staff benefits, rather than
charged to expenses. This had the effect of partially offsetting increased G&A
resulting from the higher operating costs because the Company's Changping site
is now fully operational. A part of the operating cost increase was related to
the ongoing validation activities on the manufacturing facilities in support
of the EV71 vaccine for which the NDA is currently under review.

R&D expenses in the second quarter of 2013 were $2.0 million, a decrease from
$4.7 million in the same period of 2012. The lower R&D expenses in the current
quarter were attributable to the completion of the phase III study of EV71
vaccine candidate in the first quarter of 2013. The R&D activities in the
second quarter focused on the other vaccine candidates in the Company's
pipeline.

Depreciation of property, plant and equipment and amortization of licenses and
permits for the second quarter of 2013 were $0.5 million, compared to $0.3
million for the same period of last year. Depreciation increased because more
assets were in service at the Changping facility as compared to the second
quarter of 2012.

Net income attributable to common stockholders was $1.3 million, or $0.02 per
basic share and diluted share, for the second quarter of 2013, compared to a
net loss attributed to common stockholders of $1.6 million, or $0.03 per basic
and diluted share, for the second quarter of 2012. Excluding the impact of the
bonus revision of $1.6 million, which was paid out or to be paid out from an
accrued liability account rather than charged to expenses, the net loss of the
second quarter of 2013 would approximately be $0.3 million, or $0.01 per basic
share and diluted share.

Financial Review for the Six Months Period Ended June 30, 2013

An analysis of sales and gross profit is as
follows:

In USD'000           2013 YTD    % of total sales 2012 YTD    % of total sales
                     (Unaudited) (Unaudited)      (Unaudited) (Unaudited)
Hepatitis            13,199      48.0%            5,172       33.7%
A(Healive)
Hepatitis            12,581      45.7%            10,085      65.8%
A&B(Bilive)
Hepatitis vaccines   25,780      93.7%            15,257      99.5%
Influenza vaccines   330         1.2%             46          0.3%
Core sales           26,110      94.9%            15,303      99.8%
Animal vaccine       78          0.3%             35          0.2%
Mumps                1,316       4.8%             -           -
Total sales          27,504      100%             15,338      100%
Cost of goods sold   6,853                        3,631
Gross profit         20,651      75.1%            11,707      76.3%

Total sales were increased by 79.3% to $27.5 million in first half of 2013
from $15.3 million in the same period of 2012. The sales growth was achieved
across every sales channel, including the public market, private market and
sales through distributors, which demonstrated the success of the Company's
sales strategy of combining a diversified sales model to largely improve the
market coverage and penetration.

Gross profit of the first half year of 2013 increased by 76.4% to $20.7
million from $11.7 million in the same period of 2012. Gross margin was 75.1%,
compared to 76.3% of the same period of last year. Excluding the impact of the
H5N1 inventory provision of $0.8 million, the gross marginwas 78.1%.

Selling, general and administrative expenses for the first half of 2013 were
$14.6 million, compared to $11.0 million in the same period of 2012. Selling
expenses as a percentage of first half year of 2013 sales was 31.3%, compared
to 37.9% of first half year of the prior year. The G&A expenses increased to
$6.0 million in the first half of 2012from $5.2 million for the first half
year of the prior year. The factors affecting selling, general and
administrative expenses for the first half of 2013 were the same as for the
second quarter, described above.

Research and development expenses for the first half of 2013 was $3.9 million,
a $8.1 million decrease from $12.0 million for the same period in 2012. The
lower R&D expenses were attributable to the completion of the phase III trial
for the EV71 vaccine.

Depreciation of property, plant and equipment and amortization of licenses and
permits for first half year of 2013 was $1.3 million, compared to $0.6 million
for the same period of last year. Depreciation increased because more assets
were in service at the Changping facility compared to the same period in 2012.

Net loss attributable to stockholders in the first half of 2013 was $0.7
million, or $0.01 per basic and diluted share, compared to a net loss of $7.2
million, or $0.13 per basic and diluted share, for the same period of last
year. Excluding the impact of the bonus revision of $1.6 million, which was
paid out from an accrued liability account rather than charged to expenses,
the net loss of the first half year of 2013 would approximately be $2.3
million, or $0.04 per basic share and diluted share.

As of June 30, 2013, cash and cash equivalents totaled $92.0 million, compared
to $91.2 million as of December 31, 2012. Net cash used in operating
activities was $9.3 million in the first half of 2013. Net cash used in
investing activities was $2.2 million, which was mainly used to acquire
property, plant and equipment for the Changping site. Net cash provided by
financing activities was $11.6 million in the first half of 2013, including
loan proceeds of $10.8 million. The Company continues to source new financing
resources to commercialize other pipeline products when appropriate.

Management Change

Ms. Nan Wang, Vice President of Sinovac, has been appointed as Chief Financial
Officer, effective June 1, 2013. Mr. Danny Chung, who was Chief Financial
Officer, has resigned for family reasons.

Other Developments

Sinovac owns a controlling 73.09% interest in Sinovac Biotech Co., Ltd.
(Sinovac Beijing), while Sino Bioway holds the remaining 26.91%
non-controlling interest. On April 8, 2013, the board of directorsof Sinovac
Beijing approved the transfer of Sino Bioway's interest in Sinovac Beijing to
a subsidiary of Sino Bioway, Xiamen Bioway Biotech Co., Ltd. The transfer was
completed on May 13, 2013. There was no impact on Sinovac Beijing's daily
operations and no change to the composition of the board of directors of
Sinovac Beijing after the completion of the transaction.

Conference Call Details

The Company will host a conference call prior to the market opening on
Wednesday, August 14, 2013, at 8:00 a.m. EDT (August 14, 2013 at 8:00 p.m.
China Standard Time) to review the Company's financial results and provide an
update on recent corporate developments. To access the conference call, please
dial 1-877-407-0784 (USA) or 1-201-689-8560 (International). A replay of the
call will be available from 11 a.m. EDT on August 14, 2013, to August 28,
2013, at midnight. To access the replay, please dial 1-877-870-5176 (USA) or
1-858-384-5517 (International) and reference the replay pin number 418775.

A live audio webcast of the call will also be available from the investors
section on the corporate web site at www.sinovac.com. A webcast replay can be
accessed on the corporate website beginning August 14, 2013, and the replay
will remain available for 30 days.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses
on the research, development, manufacturing and commercialization of vaccines
that protect against human infectious diseases including hepatitis A and B,
seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine
flu) and mumps, as well as animal rabies vaccine for canines. The Company
recently concluded the phase III clinical trial for enterovirus 71 (against
hand, foot and mouth disease) and filed new drug application with China Food &
Drug Administration. In 2009, Sinovac was the first company worldwide to
receive approval for its H1N1 influenza vaccine, Panflu.1, and has
manufactured it for the Chinese Central Government, pursuant to the
government-stockpiling program. The Company is also the only supplier of the
H5N1 pandemic influenza vaccine to the government-stockpiling program. Sinovac
is developing a number of new pipeline vaccines including vaccines for
pneumococcal polysaccharides, pneumococcal conjugate, varicella and rubella.
Sinovac sells its vaccines mainly in China and exports selected vaccines to
Mongolia, Nepal, and the Philippines. Sinovac has also been granted a license
to commercialize seasonal flu vaccine in Mexico.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by words or phrases such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar statements.
Among other things, the business outlook and quotations from management in
this press release contain forward-looking statements. Statements that are not
historical facts, including statements about Sinovac's beliefs and
expectations, are forward-looking statements. Forward-looking statements
involve inherent risks and uncertainties. A number of important factors could
cause actual results to differ materially from those contained in any
forward-looking statement. Sinovac does not undertake any obligation to update
any forward-looking statement, except as required under applicable law.

Helen Yang/Chris Lee
Sinovac Biotech Ltd.
Tel: +86-10-8279-9659/9696
Fax: +86-10-6296-6910
Email: ir@sinovac.com

Investors:
Stephanie Carrington
The Ruth Group
Tel: +1-646-536-7017
Email: scarrington@theruthgroup.com

Media:
Aaron Estrada
The Ruth Group
Tel: +1-646-536-7028
Email: aestrada@theruthgroup.com



SINOVAC BIOTECH LTD.
Consolidated Balance Sheets
(Unaudited)
June 30,2013
(Expressed in U.S. Dollars)
                                         June 30,2013 December 31,2012
Cash and cash equivalents                92,046,428   91,240,956
Accounts receivable                      31,248,974   23,440,135
Inventories                              16,655,331   10,529,476
Prepaid expenses and deposits            914,771      1,072,078
Total current assets                     140,865,504  126,282,645
Property, plant and equipment            79,838,322   80,083,383
Long-term inventory                      -            28,692
Long-term prepaid expenses               213,310      289,766
Deposits for acquisition of equipment    280,534      483,278
Deferred tax asset                       467,490      445,589
License and permit                       964,416      1,149,914
Total assets                             222,629,576  208,763,267
Current liabilities
Loans payable                            6,213,808    3,328,590
Accounts payable and accrued liabilities 26,522,072   24,777,808
Income tax payable                       242,381      238,775
Deferred revenue                         59,471       1,378,425
Deferred research grants                 437,609      431,097
Total current liabilities                33,475,341   30,154,695
Deferred research grants                 4,593,360    4,068,602
Loans payable                            39,425,475   31,181,235
Due to related party                     3,278,261    3,230,125
Deferred revenue                         10,955,779   10,693,247
Total long-term liabilities              58,252,875   49,173,209
Total liabilities                        91,728,216   79,327,904
Commitments and contingencies
Stockholder's equity
Common stock                             55,353       55,092
Additional paid in capital               106,808,942  106,245,934
Accumulated other comprehensive income   12,983,039   11,770,927
Dedicated reserves                       11,808,271   11,808,271
Accumulated deficit                      (12,845,353) (12,156,414)
Total stockholders' equity               118,810,252  117,723,810
Non-controlling interest                 12,091,108   11,711,553
Total equity                             130,901,360  129,435,363
Total equity and liability               222,629,576  208,763,267



SINOVAC BIOTECH LTD.
Consolidated Statements of Operations and Comprehensive Income (loss)
June 30,2013
(Unaudited)
(Expressed in U.S. Dollars)
                           Three Months ended June  Six Months ended June 30
                           30
                           2013        2012          2013         2012
Sales                     17,451,442  9,364,632     27,503,657   15,338,099
Cost of sales(exclusive
of depreciation of land
use right and amortization
of licenses and permits of 3,860,856   1,375,917     6,852,720    3,631,206
$201,211(2012-$67,486) for
three months and
$97,449(2012-$12,507) for
six months
Gross profit              13,590,586  7,988,715     20,650,937   11,706,893
Selling, general and      8,265,312   6,700,526     14,628,669   11,020,815
administrative expenses
Provision for doubtful    603,601                   885,791      -
account
Research and development  2,041,639   4,676,703     3,889,246    12,018,875
expenses
Depreciation of property,
plant and equipment and    541,720     313,265       1,313,866    620,708
amortization of licenses
Loss (gain) on disposal
and impairment of          82          -             (2,319)      -
property, plant and
equipment
Government grants         -           (405,082)                  (476,286)
recognized in income
Total operating expenses  11,452,354  11,285,412    20,715,253   23,184,112
Operating income (loss)   2,138,232   (3,296,697)   (64,316)     (11,477,219)
Interest and financing    (770,319)   (232,078)     (1,433,406)  (446,398)
expenses
Interest income           582,602     498,856       1,023,920    1,096,527
Other income (expenses)   (53,667)    14,635        7,095        132,713
Income (loss) before
income taxes and Minority 1,896,848   (3,015,284)   (466,707)    (10,694,377)
interest
Income tax recovery      17,272      797,462       14,783       800,364
Consolidated net income   1,914,120   (2,217,822)   (451,924)    (9,894,013)
(loss)
Net Income (loss)
attributable to the        595,222     (587,684)     237,015      (2,650,820)
noncontrolling interest
Net income (loss)
attributable to            1,318,898   (1,630,138)   (688,939)    (7,243,193)
stockholders
Net income (loss)         1,914,120   (2,217,822)   (451,924)    (9,894,013)
Foreign currency           1,118,992   (469,734)     1,352,701    177,049
translation adjustment
Total comprehensive       3,033,112   (2,687,556)   900,777      (9,716,964)
income (loss)
 Less: comprehensive
(income) loss attributable 706,887     (633,486)     377,604      (2,613,075)
to non-controlling
interests
Comprehensive income
(loss) attributable to     2,326,225   (2,054,070)   523,173      (7,103,889)
stockholders
Weighted average number
of shares of
 Basic                   55,056,191  54,804,498    54,995,674   54,784,801
 Diluted                  55,522,748  54,804,498    54,995,674   54,784,801
Basic and diluted         0.02        (0.03)        (0.01)       (0.13)
earnings (loss) per share



SINOVAC BIOTECH LTD.
Consolidated Statements of Cash Flow
June 30,2013
(Unaudited)
(Expressed in U.S. Dollars)
                        Three Months ended June 30  Six Months ended June 30
                        2013          2012           2013         2012
Cash flows used in
operating activities:
Net income (loss) for  1,914,120     (2,217,822)    (451,924)    (9,894,013)
the period
deferred income tax    (17,272)      69,231         (14,783)     66,329
stock-based            61,854        173,791        137,693      253,966
compensation
inventory provison     767,811       1,239,399      767,811      1,325,263
provision for
(recovery of) doubtful  603,602       -              885,792      -
allowance
Impairment of
equipment and           82            2,460          (2,319)      2,460
losses(gain) on
disposal
unrealized foreign     -             166,701        -            (43,880)
exchange gain (loss)
research and
development             -             -              -            (79,116)
expenditures qualified
for government grant
 depreciation of
property, plant and     1,787,173     1,293,974      3,485,540    2,546,524
equipment,
deferred government
grants recognized as    -             (325,965)                   (397,169)
income
accreation expenses    34,282        68,398         52,373       136,789
Changes in assets and
liabilities:
accounts receivable,   (4,510,518)   614,574        (8,287,685)  (671,232)
trade
inventory             (3,581,987)   (4,845,918)    (6,657,043)  (6,165,393)
income tax payable     -             (3,136,687)    -            (3,124,477)
 prepaid expenses and  399,292       (293,778)      255,543      488,378
deposits
 defer revenue         (161,644)     (5)            (1,228,643)  (99,522)
accounts payables and  (592,990)     882,535        1,753,684    (2,522,272)
accrued liabilities
Net cash used by       (3,296,195)   (6,309,112)    (9,303,961)  (18,177,365)
operating activities
Cash flows from
financing activities
Loan proceed           3,304,721     3,985,568      10,784,502   6,009,507
Loan Payments          (161,606)     -              (161,606)    -
 Proceeds from
issuance of common      406,240       343,040        417,120      393,440
stock
Subscription received  8,456         2,400          8,456        2,400
Dividends paid to
non-controlling         -             -              -            (800,717)
shareholder of Sinovac
Beijing
Loan from
non-controlling         -             -              -            3,175,266
shareholder of Sinovac
Dalian
Government grant       220,187       240,580        523,813      240,580
received
Net cash provided by   3,777,998     4,571,588      11,572,285   9,020,476
financing activities
Cash flows used in
investing activities:
Prepayments for
acquisition of          346,884       1,219,610      208,330      886,830
equipment
Acquisition of
property, plant and     (855,249)     (4,878,770)    (2,439,947)  (7,506,451)
equipment
Net cash used in       (508,365)     (3,659,160)    (2,231,617)  (6,619,621)
investing activities
Exchange gain on cash  510,738       347,410        768,765      930,188
and cash equivalents
Increase (decrease) in
cash and cash           484,176       (5,049,274)    805,472      (14,846,322)
equivalents
Cash and cash
equivalents, beginning  91,562,252    94,489,647     91,240,956   104,286,695
of period
Cash and cash
equivalents, end of     92,046,428    89,440,373     92,046,428   89,440,373
period
Cash paid for interest 696,361       231,563        1,295,796    477,639
Cash paid for income   -             -              -            -
taxes
Supplemental schedule
of non-cash activities:
Acquisition of
property, plant and
equipment included in
accounts payable and   3,750,767     9,962,278      3,750,767    9,962,278
accrued liabilities

SOURCE Sinovac Biotech Ltd.

Website: http://www.sinovac.com
 
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